CASE DIGEST: DOUBLE TAXATION NURSERY CARE CORPORATION, ET AL, vs.

ACEVEDO, G.R. No. 180651, July 30, 2014

FACTS OF THE CASE

The CITY OF MANILA assessed and collected taxes from the individual
petitioners pursuant to Section 15 (Tax on Wholesalers, Distributors, or Dealers)
and Section 17 (Tax on Retailers) of the Revenue Code of Manila. At the same time,
the CITY OF MANILA imposed additional taxes upon the petitioners
pursuant to Section 21 of the Revenue Code of Manila, as amended, as a condition
for the renewal of their respective business licenses for the year 1999.
SECTION 21 OF THE REVENUE CODE OF MANILA
stated: Section 21.Tax on Business Subject to the Excise, Value-Added or
Percentage Taxes under the NIRC - On any of the following businesses and articles
of commerce subject to the excise,
VALUE-ADDED OR PERCENTAGE TAXES
under the National Internal Revenue Code, hereinafter referred to as NIRC, as
amended, a tax of FIFTY PERCENT (50%) OF ONE PERCENT (1%) per annum
on the gross sales or receipts of the preceding calendar year is hereby
imposed: A) On person who sells goods and services in the course of trade or
businesses;
PROVIDED that all registered businesses in the City of Manila already paying the
aforementioned tax shall be exempted from payment thereof.
To comply with the City of Manila’s assessment of taxes under Section 21, the
PETITIONERS paid under protest the following amounts corresponding to the first
quarter of 1999, to wit: (a) Nursery Care Corporation ₱595,190.25; (b) Shoemart
Incorporated ₱3,283,520.14;(c) Star Appliance Center ₱236,084.03; (d) H & B, Inc.
₱1,271,118.74; (e) Supplies Station, Inc. ₱239,501.25; (f) Hardware Work Shop,
Inc. ₱609,953.24. By letter dated March 1, 1999, the PETITIONERS formally
requested the Office of the City Treasurer for the tax credit or refund of the local
business taxes paid under protest However, then City Treasurer Anthony
Acevedo(Acevedo) denied the request. On April 8, 1999, the PETITIONERS sought the
reconsideration of the denial of their request. Still, the CITY TREASURER did not
reconsider. In the meanwhile, Liberty Toledo succeeded Acevedo as the City Treasurer of
Manila. PETITIONERS filed their respective petitions for certiorari in the Regional Trial
Court (RTC) in Manila.

RTC held that it perceives

NO INSTANCE OF THE CONSTITUTIONALLY PROSCRIBED DOUBLE TAXATION
, in the strict, narrow or obnoxious sense, imposed upon the petitioners under Section 15
and 17, on the one hand, and under Section 21, on the other, of the questioned Ordinance.
The tax imposed under Section 15 and 17, as against that imposed under Section 21
, are levied against different tax objects or subject matter. The tax under Section 15
is imposed upon wholesalers, distributors or dealers, while that under Section17 is
imposed upon retailers. In short, taxes imposed under Section 15 and 17
is a tax on the business of wholesalers, distributors, dealers and retailers. On the
other hand, the tax imposed upon herein petitioners under Section 21 is not a
tax against the business of the petitioners (as wholesalers, distributors, dealers or
retailers) but is rather a tax against consumers or end-users of the articles sold by
petitioners. CA affirmed the decision of the RTC.

ISSUE:
Whether or not the collection of taxes under Section 21 of Ordinance No. 7794, as
amended, constitutes double taxation? YES

RULING:
There is DOUBLE TAXATION when the same taxpayer is taxed twice when he
should be taxed only once for the same purpose by the same taxing authority within the
same jurisdiction during the same taxing period, and the taxes are of the same kind or
character. DOUBLE TAXATION is obnoxious. DOUBLE TAXATION means taxing the
same property twice when it should be taxed only once ; that is, "
taxing the same person twiceby the same jurisdiction for the same thing
." It is obnoxious when the taxpayer is taxed twice, when it should be but once. Otherwise
described as "DIRECT DUPLICATE TAXATION," the two taxes must be imposed on the
same subject matter, for the same purpose, by the same taxing authority, within the same
jurisdiction, during the same taxing period; and the taxes must be of the same kind or
character.
Accordingly, respondent’s assessment under both Sections 14 and 21 had no basis.
PETITIONER is indeed liable to pay business taxesto the City of Manila; nevertheless,
considering that theFORMER has already paid these taxes under Section 14 of the Manila
RevenueCode, it is exempt from the same payments under Section 21 of the same code
. Hence, payments made under Section 21 must berefunded in favor of petitioner. It is
undisputed that PETITIONER paid business taxes based on Sections 14 and 21 for the
fourth quarter of 2001 in the total of P470, 932.21. Therefore, it is ENTITLED TO A
REFUND OF ₱164,552.04 corresponding to the payment under Section 21 of the Manila
Revenue Code. In fine, the IMPOSITION OF THE TAX UNDER SECTION 21 OF THE
REVENUE CODE OF MANILA constituted double taxation, and the taxes collected
pursuant thereto must be refunded.